Empowering Women for a Secure Retirement

Here’s a telling fact to digest - from the age of 65 to the end of life, the majority of American women are single, whereas the majority of men are married. What does that mean for women retirees? For one thing, it means that most are not able to take advantage of the old adage “two can live more cheaply than one,” where, for example, two Social Security incomes help pay for shared living costs. Furthermore, while it is tempting to argue that many of those single 65+ women were once married and therefore have the wealth of a deceased spouse to ease the transition, the statistics suggest otherwise. After losing a partner through death or divorce, a woman’s standard of living generally declines.

But even before age 65, the road to retirement security is a lot more challenging for women. The above is also coupled with other statistics such as:

  • Women live longer than men (usually by about 5 years), which means that they have to make their savings and investments last longer
  • Years of earning less than a male counterpart affect both savings rates and eventual Social Security benefits (i.e. both are lower than the average male)
  • Because women often remain the primary caretakers of children and the elderly, they work about seven fewer years compared to men, which again translates to less years of potential retirement savings and Social Security credits

So given the reality that women must (to borrow a golf metaphor) drive harder, hit the ball longer, to reach the green of a secure retirement, I’m sharing the actions below from an article written by Eleanor Blayney that every woman should be taking. 

Put herself first – even ahead of children and elderly parents. This does not mean neglecting those she loves. Far from it. It means taking care of herself so she is not depleted financially or emotionally. It means funding a retirement plan before funding a college savings plan. It means tapping parents’ own assets for their care, and knowing that Medicaid is available as a safety net if those assets run out. It means hiring the help needed, or even having her parents pay her for care-taking services.
Build her own retirement assets. When a woman is not working, she should still try to set aside funds for her future. This can be done through spousal IRAs, or even in after-tax savings accounts.  
Invest in herself. The key here is to remain marketable and employable even when there are times she cannot work or chooses not to. Getting back to work is the best way to build retirement wealth, through participation in a retirement plan and building up more Social Security credits. Investing in herself also means getting the disability and long-term care insurance coverage women need but often neglect.
Get smart about Social Security. All women need to be aware that benefits are calculated on the highest 35 years of earnings. If there are fewer than 35 years, then zeroes go into the calculation, bringing down the benefit. And women need to know they are eligible for a spousal benefit as long as they have been married to their spouse for at least 10 years. Those two numbers – 35 and 10 – should be top of mind before making decisions to leave the workplace or a marriage.
Take more investment risk. Every woman needs the growth of equities more than the safety of fixed income, particularly in the early years of investing in order to drive her overall retirement plan.
Finally, women should not be afraid to ask for help. Singleness in retirement does not require stoic self-sufficiency, nor does it mean going it alone. Finding a financial advisor to be a trusted partner in budgeting, risk management, and investing decisions allows women to overcome the disadvantages they may face in retirement, and helps them achieve the financial security they so richly deserve.